- --------------------------------------------------------------------------------
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------
FORM 10-QSB/A
Amendment No. 1
|X| QUARTERLY REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly Period ended June 30, 1998
|_| TRANSITION REPORT UNDER SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the Transition Period from _________ to _________
Commission File Number _____________________
IDAHO CONSOLIDATED METALS CORPORATION
(Exact Name of Small Business Issuer as Specified in its Charter)
British Columbia, Canada 82-0465571
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
504 Main Street, Suite 470
Post Office Box 1124
Lewiston, Idaho 83501
(Address of Principal Executive Offices)
(208) 743-0914
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer has (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes |_| No
|X|
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 8,867,441 as of March 31, 1998.
Transitional Small Business Disclosure Format (check one): Yes |_| No |X|
<PAGE>
IDAHO CONSOLIDATED METALS CORP.
Form 10-QSB
For the Fiscal Quarter ended March 31, 1998
TABLE OF CONTENTS
<TABLE>
<S> <C>
Page
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS OF THE COMPANY...................................................................3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION..................................................................................10
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS....................................................................................12
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS............................................................13
ITEM 3. DEFAULTS UPON SENIOR SECURITIES......................................................................15
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..................................................15
ITEM 5. OTHER INFORMATION....................................................................................16
ITEM 6. EXHIBITS AND REPORTS FILED ON FORM 8-K..............................................................15
SIGNATURES.......................................................................................................16
</TABLE>
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS OF THE COMPANY
The following unaudited financial statements for the period ended 30 June, 1998
are included in response to Item 1 and have been compiled by Staley, Okada,
Chandler & Scott, Chartered Accountants.
The financial statements should be read in conjunction with Management's
Discussion and Analysis or Plan of Operations and other financial information
included elsewhere in this Form 10-QSB.
Page 3
<PAGE>
STALEY, OKADA, CHANDLER & SCOTT
Chartered Accountants
(A Partnership of Incorporated Professionals)
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[X] 225 - 4299 Canada Way L.M. Okada, Ltd. 221 - 20316 56th Avenue
Burnaby, B.C. V5G 1H3 C.N. Chandler, Ltd. Langley, B.C. V3A 3Y7
Tel: (604) 434-1384 K.A. Scott, Ltd. Tel: (604) 532-9913
Fax: (604) 434-7045 J.M Bhagirath, Ltd. Fax: (604) 532-1209
NOTICE TO READER
- --------------------------------------------------------------------------------
We have compiled the interim consolidated balance sheet of Idaho Consolidated
Metals Corp. as at 30 June 1998 and the interim consolidated statements of
changes in shareholders' equity, operations and cash flows for the three months
and six months then ended from information provided by management. We have not
audited, reviewed or otherwise attempted to verify the accuracy or completeness
of such information. Readers are cautioned that these statements may not be
appropriate for their purposes.
signed "Staley, Okada, Chandler & Scott"
Burnaby, B.C. STALEY, OKADA, CHANDLER & SCOTT
1 December 1998 CHARTERED ACCOUNTANTS
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[Logo]
Members of Institute of Chartered Accountants of British Columbia
Page 4
<PAGE>
Idaho Consolidated Metals Corp. Statement 1
(An Exploration Stage Company)
Interim Consolidated Balance Sheet
As at 30 June
U.S. Funds
Unaudited - See Notice to Reader
<TABLE>
ASSETS 1998 1997
- ---------------------------------------------------------------------- -- ------------------ -- ------------------
<S> <C> <C>
Current
Cash $ 461 $ 25,126
Accounts receivable 8,671 5,084
Cash in trust 50,000 -
------------------ -- ------------------
59,132 30,210
Restricted Investments 90,000 90,000
Property Rights, Plant and Equipment 3,105,938 4,204,527
------------------ -- ------------------
$ 3,255,070 $ 4,324,737
- ---------------------------------------------------------------------- -- ------------------ -- ------------------
LIABILITIES
- ---------------------------------------------------------------------- -- ------------------ -- ------------------
Current
Bank loan $ - $ 17,175
Accounts payable - Related parties 102,951 225,255
- Other 227,583 607,583
Current portion of notes payable 253,995 546,843
------------------ -- ------------------
584,529 1,396,856
------------------ -- ------------------
Notes Payable 370,857 16,209
------------------ -- ------------------
Share Subscriptions Payable - 166,995
------------------ -- ------------------
SHAREHOLDERS' EQUITY
- ---------------------------------------------------------------------- -- ------------------ -- ------------------
Share Capital - Statement 2 8,710,329 7,570,177
Deficit - Accumulated during the exploration stage - Statement 2 (6,358,060) (4,772,915)
Foreign Currency Translation Adjustment - Statement 2 (52,585) (52,585)
------------------ -- ------------------
2,299,684 2,744,677
------------------ -- ------------------
$ 3,255,070 $ 4,324,737
- ---------------------------------------------------------------------- -- ------------------ -- ------------------
</TABLE>
ON BEHALF OF THE BOARD
"Robert Young" , Director
- ------------------------------
"Delbert W. Steiner" , Director
- ------------------------------
- See Accompanying Notes -
Page 5
<PAGE>
Idaho Consolidated Metals Corp. Statement 2
Interim Consolidated Statement of Changes
In Shareholders' Equity
U.S. Funds
Unaudited - See Notice to Reader
<TABLE>
Deficit
Accumulated Foreign
During the Currency
Common Shares Exploration Translation
Shares Amount Stage Adjustment Total
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance - 31 December 1996 6,854,208 $ 7,466,177 $ (4,291,402) $ (52,585) $ 3,122,190
Shares issued for resource
properties 125,000 104,000 - - 104,000
Loss for the period - - (481,513) - (481,513)
--------------------------------------------------------------------------------------
Balance - 30 June 1997 6,979,208 $ 7,570,177 $ (4,772,915) $ (52,585) $ 2,744,677
- -----------------------------------------------------------------------------------------------------------------------
Balance - 31 December 1997 $ 9,434,650 $ 8,710,329 $ (6,015,621) $ (52,585) $ 2,642,123
Loss for the period - - $ (342,439) - $ (342,439)
--------------------------------------------------------------------------------------
Balance - 30 June 1998 $ 9,434,540 $ 8,710,329 $ (6,358,060) $ (52,585) $ 2,299,684
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
Statement 3
Interim Consolidated Statement of Operations
U.S. Funds
Unaudited - See Notice to Reader
<TABLE>
1998 1997
------------------------------------- -------------------------------------
Three Six Three Six
Months Months Months Months
Ended Ended Ended Ended
30 June 30 June 30 June 30 June
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Expenses
General and administrative
- Schedule 1 $ 169,717 $ 305,313 $ 260,605 $ 470,617
----------------------------------------------------------------------------
Other Income (Expenses)
Interest income (1,652) (2,313) - -
----------------------------------------------------------------------------
Interest expense 30,267 39,439 7,017 10,896
----------------------------------------------------------------------------
28,615 37,126 7,017 10,896
Loss for the Period $ 198,332 $ 342,439 $ 267,622 $ 481,513
- -------------------------------------------------------------------------------------------------------------------------
Loss per Common Share $ 0.02 $ 0.04 $ 0.04 $ 0.07
- -------------------------------------------------------------------------------------------------------------------------
Weighted Average Number of Common Shares
Outstanding $ 9,434,686 $ 9,434,686 $ 6,879,208 $ 6,879,208
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
- See Accompanying Notes -
Page 6
<PAGE>
Idaho Consolidated Metals Corp. Statement 4
Interim Consolidated Statement of Cash Flows
U.S. Funds
Unaudited - See Notice to Reader
<TABLE>
1998 1997
------------------------- --------------------------
Three Six Three Six
Months Months Months Months
Ended Ended Ended Ended
Cash Resources Provided By (Used In) 30 June 30 June 30 June 30 June
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Activities
Loss for the period (198,332) $ (342,439) $ (267,622) $ (481,513)
Item not affected by cash
Amortization 2,276 4,552 3,144 6,288
------------------------------------------------------------------------
Changes in current assets and
liabilities
Accounts receivable (4,320) (4,683) (4,148) (5,084)
Other - - 2,750 2,750
Accounts payable
- Related parties (90,411) (78,041) 49,211 52,899
- Other 65,672 73,009 108,659 204,798
------------------------------------------------------------------------
Net cash used in operating activities (225,115) (347,602) (108,006) (219,862)
Investing Activities
Property rights, plant and equipment (51,141) (88,454) (108,022) (195,800)
Restricted investments - - (5,000) (5,000)
------------------------------------------------------------------------
Net cash used in investing activities (51,141) (88,454) (113,002) (200,800)
------------------------------------------------------------------------
Financing Activities
Bank loan - - (4,998) (4,998)
Proceeds of notes payable 148,633 357,632 13,171 16,649
Share subscriptions payable - - 166,995 166,995
------------------------------------------------------------------------
Net cash provided by financing
activities 148,633 357,632 175,168 178,646
------------------------------------------------------------------------
Net Decrease in Cash (127,623) (78,424) (45,860) (242,016)
Cash position - Beginning of period 128,084 78,885 70,986 267,142
------------------------------------------------------------------------
Cash Position - End of Period $ 461 $ 461 $ 25,126 $ 25,126
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
- See Accompanying Notes -
Page 7
<PAGE>
Idaho Consolidated Metals Corp. Schedule 1
Interim Consolidated Schedule of Administrative Expenses
U.S. Funds
Unaudited - See Notice to Reader
<TABLE>
1998 1997
--------------------------------- ---------------------------------
Three Six Three Six
Months Months Months Months
Ended Ended Ended Ended
30 June 30 June 30 June 30 June
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Management fees and wages $ 60,656 $ 115,545 $ 45,665 $ 100,138
Professional fees 60,311 92,965 128,617 206,099
Travel 18,421 35,654 19,051 43,963
Shareholder information 12,473 22,841 38,186 64,523
Office and general 5,904 15,491 12,165 26,727
Office rent 5,196 11,579 4,590 9,180
Amortization 2,276 4,552 3,144 6,288
Transfer agent and filing fees 2,633 4,486 3,279 5,991
Entertainment and promotion 1,847 2,200 863 2,663
Finance fees - - 5,045 5,045
--------------------------------------------------------------------
Expenses for the Period $ 169,717 $ 305,313 $ 260,605 $ 470,617
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
Idaho Consolidated Schedule of Property Rights, Schedule 2
Plant and Equipment
U.S. Funds
Unaudited - See Notice to Reader
<TABLE>
1998 1997
---------------------------------- ----------------------------------
Three Six Three Six
Months Months Months Months
Ended Ended Ended Ended
30 June 30 June 30 June 30 June
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Direct - Mineral
Idaho County, Idaho, U.S.A.
Geological $ 25,324 40,005 $ 32,209 $ 61,812
Lease payments and acquisition 12,000 24,600 6,351 170,261
Camp and general 3,765 7,445 16,412 25,815
Assaying, staking and claim
rental 3,382 5,456 - -
Survey 498 4,776 3,746 9,824
Transportation 3,701 3,701 - -
Drilling - - 124 15,094
Process plant and equipment - - 9,022 13,622
Environmental - - - 2,964
---------------------------------------------------------------------
48,670 85,983 67,864 299,392
Equipment 2,471 2,471 - -
---------------------------------------------------------------------
Costs for the Period $ 51,141 $ 88,454 $ 67,864 $ 299,392
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
- See Accompanying Notes -
Page 8
<PAGE>
Idaho Consolidated Metals Corp.
Notes to Interim Consolidated Financial Statements
30 June 1998
U.S. Funds
Unaudited - See Notice to Reader
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
The notes to the consolidated financial statements as at 31 December
1997, as set forth in the company's 1997 Annual Report substantially
apply to these interim consolidated financial statements and are not
repeated here.
- --------------------------------------------------------------------------------
2. Interim Consolidated Financial Statements Adjustments
The financial information given in the accompanying unaudited interim
consolidated financial statements reflects all adjustments which are,
in the opinion of management, necessary to a fair statement of the
results for the interim periods reported. All such adjustments are of a
normal recurring nature. All financial statements presented herein are
unaudited.
- --------------------------------------------------------------------------------
Page 9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
1. Results of Operations
Second Quarter Fiscal 1998 Compared with Second Quarter 1997
The Company is in the exploration stage and has yet to generate revenue from
production. The Company continues to explore its mineral properties in an effort
to establish proven ore reserves, and now has the additional resources of a
joint venture partner to assist in this regard.
In the second quarter, general and administrative expenses decreased from
$260,605 to $169,717 compared to the second quarter of 1997, representing a 35%
savings. Significant decreases were experienced in both travel and shareholder
information expenses (67% decrease), as well as a 53% reduction in professional
fees. Management fees and wages increased by 33% over the same period in 1997,
due to the addition of an additional staff position. On a quarter over quarter
basis, however, the Company saved over $90,000.
Under U.S. generally accepted accounting principles, the Company must record
executive remuneration on the release of performance shares from escrow. The
Company issued 750,000 shares at the time of its initial public offering to the
original principal founders of the Company at a price of CDN$0.01 per share,
subject to the terms of an escrow agreement. The number of shares released from
escrow is calculated on an annual basis as the Company expends qualifying
amounts on its exploration and development programs, and the Company must seek
regulatory approval for each release. During the second quarter of 1998, the
Company did not apply for regulatory approval for a release of any escrow
shares, and accordingly there was no executive remuneration expense and no
corresponding change to the Company's share capital. The executive remuneration
is a deemed amount and is based upon the fair market value of the Company's
common shares during 1998.
The Company had very little income during the quarter. The Company experienced a
net loss for the period of $198,332, of which $169,717 was related to general
and administrative expenses. The Company had a loss of $267,622 for the same
period in 1997.
During the quarter, the Company expended $51,141 on its resource property
exploration, development and acquisition program as compared to $67,864 in the
comparable 1997 period. The Company had lease payments and acquisition costs of
$12,000 in the quarter, compared to $6,351 in 1997. The Company had no
expenditures on drilling, process plant and equipment, environmental and
roadwork expenses. The Company experienced the majority of these cost savings on
it resource expenditures by virtue of having entered into joint venture
agreements on the Company's most promising properties with Cyprus Gold
Exploration Corporation, which has now merged with Kinross Gold Corporation.
Six Months Ended June 1998 Compared with Six Months Ended 1997
The Company is in the exploration stage and has yet to generate revenue from
production. The Company continues to explore its mineral properties in an effort
to establish proven ore reserves, and now has the additional resources of a
joint venture partner to assist in this regard.
In the first half, general and administrative expenses decreased from $470,617
to $305,313 compared to the first half of 1997, representing a 35% savings.
Significant decreases were experienced in both travel and shareholder
information expenses (46% decrease), as well as a 55% reduction in professional
fees. Management fees and wages increased by 15% over the same period in 1997,
due to the addition of an additional staff position. Compared to the first half
of 1997, the Company saved over $165,000.
Page 10
<PAGE>
Under U.S. generally accepted accounting principles, the Company must record
executive remuneration on the release of performance shares from escrow. The
Company issued 750,000 shares at the time of its initial public offering to the
original principal founders of the Company at a price of CDN$0.01 per share,
subject to the terms of an escrow agreement. The number of shares released from
escrow is calculated on an annual basis as the Company expends qualifying
amounts on its exploration and development programs, and the Company must seek
regulatory approval for each release. During the first half of 1998, the Company
did not apply for regulatory approval for a release of any escrow shares, and
accordingly there was no executive remuneration expense and no corresponding
change to the Company's share capital. The executive remuneration is a deemed
amount and is based upon the fair market value of the Company's common shares
during 1998.
The Company had very little income during the six months. The Company
experienced a net loss for the period of $342,439, of which $305,313 was related
to general and administrative expenses. The Company had a loss of $481,513 for
the same period in 1997.
During the half, the Company expended $85,983 on its resource property
exploration, development and acquisition program as compared to $299,392 in the
comparable 1997 period. The Company had lease payments and acquisition costs of
$24,600 in the half, compared to $170,261 in 1997. The Company had no
expenditures on drilling, process plant and equipment, environmental and
roadwork expenses. The Company experienced the majority of these cost savings on
it resource expenditures by virtue of having entered into joint venture
agreements on the Company's most promising properties with Cyprus Gold
Exploration Corporation, which has now merged with Kinross Gold Corporation.
2. Liquidity and Capital Resources
The Company is dependent on the proceeds of debt and equity financing, including
but not limited to public offerings, private placements and the exercise of
stock options and warrants as well as from the optioning or sale of its
properties and the sale of other assets to fund its general and administrative
expenditures and its mineral exploration and development costs. Without such
proceeds, the Company may not continue as a going concern. See note 1 to the
Company's December 31, 1997 Financial Statements for additional information. The
Company will need further funds to continue its operations and there is no
reasonable assurance that such funding will be available.
The Company plans to conduct exploration and development on its various
properties within the constraints of current market conditions, with its
objective being the maximization of geologic understanding of the projects with
minimal expenditures. The Company's estimated budget for all properties is
$175,000 including BLM rental fees and contractual payments to underlying claim
owners. The majority of the budget will be spent on geologic mapping, sampling
and assays, geologic interpretation, geophysics, geochemical soil sampling,
property payments and claim fees. The estimated budget is exclusive of
expenditures by the Company's joint venture partner on the Deadwood and Petsite
properties.
The Company requires approximately $250,000 for general and administrative
expenses for the remainder of the fiscal year, and $253,995 for payments on its
current notes payable of which $250,000 is a demand note, currently subject to
litigation as discussed herein under the title Legal Proceedings - Gumprecht -
Promissory Note. The Company anticipates repayment of these notes from the
proceeds of the Private Placement, the proceeds of convertible debt issues, and
the conversion of the promissory notes and the exercise of stock options.
During the second quarter ended June 30, 1998, the Company has received cash in
the amount of $150,000 from the issue of a convertible promissory note to
related parties. These funds were used for
Page 11
<PAGE>
working capital purposes and funding of exploration, development and claim
maintenance of the Company's properties. See note 12 to the Company's December
31, 1997 Financial Statements and Item 2 - Changes in Securities - for further
details.
As at June 30, 1998, the Company has a working capital deficiency of $525,397
versus a working capital deficiency of $1,366,646 for the same period in 1997.
Accounts payable to related parties accounts for approximately 20% of the
deficiency, while trade accounts payable and the current portion of notes
payable accounts for the other approximate 80%. The Company anticipates
improvement of this deficiency from the proceeds of the convertible promissory
notes issued in 1998. The Company is in the process of restructuring certain of
its obligations with certain creditors during the quarter in order to assist in
the correction of this deficiency. The VSE accepted the Company's shares for
debt exchange agreements with those creditors, which resulted in the removal of
C$414,063.17 in debt in exchange for approximately 567,209 shares on April 21,
1998. This matter is more particularly discussed in Item 2 - Changes in
Securities.
Positive cash flow from the financing activities of the Company of $357,632 and
$178,646 were recorded at June 30, 1998 and 1997, respectively. The long-term
debt increased to $370,857 in 1998 from $16,209 in 1997 and current liabilities
decreased to $584,529 in 1998 from $1,396,856 in 1997. Of the June 30, 1998
current liabilities, $227,583 represents the amounts payable to other parties
and $102,951 represent amounts payable to various related parties.
Negative Cash flows from operating activities of ($347,602) and ($219,862) were
recorded as at June 30, 1998 and 1997, respectively. The Company will continue
recording negative cash flow from operating activities unless significant
revenue is generated from ore production. The continued negative cash flow will
have a material negative impact on liquidity.
Investing activities consist of funds being expended on resource properties. The
net cash expended on investing activities decreased to $88,454 in 1998 from
$200,800 in 1997. The 1998 and 1997 additions to resource properties were
primarily from cash.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Civil Suit by Joe Swisher and IMD
The following discussion was disclosed in the Company's Form 10-QSB for the
quarter ended March 31, 1998 and the Company's Form 10-KSB for the year ended
December 31, 1997 as the legal proceedings recounted below were known at the
time of filing of those documents. These legal proceedings were resolved in the
second quarter of 1998, and hence their disclosure herein, despite their prior
disclosure.
On October 18, 1996 Mr. Swisher and Idaho Mining and Development Company, Inc.
("IMD") filed suit against the Company for $3,473,857 or alternatively $344,257
and 1,304,000 common shares of the Company plus interest, attorney fees and any
further relief available.
Subsequently, the Company filed a suit against Mr. Swisher and Silver Crystal
Mines, Inc. alleging breach of contract on the Eckert's Hill processing plant
contract and filed a counter-claim against Mr. Swisher and IMD for alleged
failure to perform contracted assessment work, alleged breach of the
Page 12
<PAGE>
Swisher-Br metallurgical process contract and alleged breach of certain other
mineral property arrangements.
On April 29, 1998, the parties entered into a Global Settlement Agreement which
causes all claims and counter-claims between the parties to be resolved. A copy
of this agreement is filed as an exhibit to the Company's 1997 Form 10-KSB. In
full and final settlement of all existing and potential claims between and
amongst the parties, the Company will pay $50,000 to IMD within 2 business days
of the settlement and will deposit in trust a further $50,000. Both of these
payments have been made. The balance in trust will be released to IMD upon
delivery by IMD to the Company of certain quitclaim deeds to the Claim Block
properties. The Company has recorded a gain on the settlement of the lawsuit of
$223,946.
The settlement has been recorded as of December 31, 1997 and the $100,000 is
accrued within amounts payable to related parties in the financial statements.
See also note 7 to the Company's December 31, 1997 Financial Statements for
further details. The gain on debt settlement has been recorded as an
extraordinary item in the statement of operations for the year ended December
31, 1997. See also note 8 to the Company's December 31, 1997 Financial
Statements for additional information.
Civil Suit by Gumprecht - Promissory Note
As reported in the Company's Form 10-QSB for the quarter ended March 31, 1998,
the Company elected to allow a default to be entered in the District Court of
the Second Judicial District of the State of Idaho, in and for the County of
Idaho on January 30, 1998. On May 18, 1998 the Court ordered the Company to pay
the amount of $332,216.71 which included interest through May 17, 1998. The
Company is currently negotiating payment terms of the judgment with the
Plaintiffs.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Shares for Debt Exchange
On April 21, 1998 the Company settled outstanding indebtedness in the aggregate
amount of C$414,063 owing to certain creditors by issuing a total of 567,209
common shares in the capital stock of the Company at a deemed price of C$0.73
per share pursuant to the terms and conditions of the respective Debt Settlement
Agreements dated June 30, 1997. The Company received VSE acceptance of this
transaction on March 18, 1998. The shares were issued on April 21, 1998 and
accordingly, the debts were extinguished upon the issuance of the shares. The
particulars of the creditors are as follows:
<TABLE>
<S> <C> <C>
Name of Creditor Amount of Indebtedness (C$) No. of Shares
- ------------------------------------------------- ------------------------------------ -----------------------------
Tomasovich Family Trust (1) $56,310.37 77,137
- ------------------------------------------------- ------------------------------------ -----------------------------
Wilfried Struck(2) $28,155.59 38,569
- ------------------------------------------------- ------------------------------------ -----------------------------
Stephens, Berg & Lasater $73,000.00 100,000
- ------------------------------------------------- ------------------------------------ -----------------------------
Delbert Steiner(3) $180,880.22 247,781
- ------------------------------------------------- ------------------------------------ -----------------------------
Robert A. Young & Associates(4) $28,700.00 39,315
- ------------------------------------------------- ------------------------------------ -----------------------------
Staley, Okada, Chandler, & Scott(5) $47,016.99 64,407
- ------------------------------------------------- ------------------------------------ -----------------------------
TOTAL $414,063.17 567,209
- ------------------------------------------------- ------------------------------------ -----------------------------
</TABLE>
(the "Creditors")
Page 13
<PAGE>
Notes:
(1) Theodore Tomasovich, a director of the Company, is the Trustee of the
Tomasovich Family Trust and has voting control over the Trust.
(2) Wilfried Struck is Vice-President, Chief Operating Officer, Mining and
Exploration of the Company.
(3) Delbert Steiner is a director, Chairman, President and Chief Executive
Officer of the Company.
(4) Robert A. Young is a director of the Company and the sole proprietor of
Robert A. Young & Associates.
(5) Kenneth Scott, the Chief Financial Officer of the Company, is a partner of
Staley, Okada, Chandler & Scott.
During 1997, the Company and the Creditors had reached agreement to settle debts
in the amount of C$414,063.17 by the issuance of 567,209 common shares. The debt
settlement was subject to approval by the VSE. The debt settlement has been
recorded in the Company's December 31, 1997 Financial Statements; VSE acceptance
was received on March 18, 1998 and the shares were issued on April 21, 1998. In
addition to the debt settlement, the Company negotiated a reduction of
previously invoiced and accrued legal fees of $179,138 from the Company's former
U.S. securities counsel. The reduction has been recorded as an extraordinary
item in the consolidated statement of operations for the year ended December 31,
1997. See also note 8 to the Company's December 31, 1997 Financial Statements.
Certain of the debts settled were owed to parties related to the Company. See
Item 12 - Related Transactions - of the Company's 1997 Form 10-KSB for further
information.
Convertible Promissory Notes
On April 9, 1998 the Company entered into convertible loan agreements #1 and #2
with the Tomasovich Family Trust (the "Trust"), pursuant to which the Company
issued convertible promissory notes in the amounts of $100,000 and $110,000
dated January 23, 1998 and March 31, 1998, respectively. The Company received
VSE acceptance of the two convertible loan agreements on June 22, 1998,
following approval by the shareholders of the Company at the annual general
meeting held on June 16, 1998, of the possible change of control of the Company
to Theodore Tomasovich and the Trust. The repayment terms and conversion
features are more particularly detailed in Item 2 - Changes in Securities - in
the Company's March 31, 1998 Form 10-QSB.
On May 15, 1998 the Company entered into convertible loan agreement #3 with the
Trust pursuant to which the Company issued a convertible promissory note in the
amount US$150,000 dated May 15, 1998. The Company received VSE approval of this
transaction on June 22, 1998 following approval by the shareholders of the
Company at the annual general meeting held on June 16, 1998, of the possible
change of control of the Company to Theodore Tomasovich and the Trust. The
repayment terms and conversion features are more particularly detailed below.
The lender with respect to the convertible promissory notes is the Trust, which
owned 1,498,111 shares, or 15.88% of the Company on a non-diluted basis, as of
June 30, 1998. The Trust is a private family trust, of which Mr. Theodore
Tomasovich, a Director of the Company, is a trustee.
The US$150,000 convertible promissory note issued under convertible loan
agreement #3 is repayable on or before May 15, 2000 bearing interest at 9% per
annum. After June 17, 1998, the lender may require the Company to convert all or
any portion of the principal amount of the loan advanced and then outstanding
into units at a conversion price of one unit for each C$0.23 of indebtedness
until and including May 15, 1999 and at a conversion price of one unit for each
C$0.28 of indebtedness during the period from May 16, 1999 until May 15, 2000
for a maximum of 932,608 common shares if the principal amount is converted in
its entirety in the first year and a maximum of 766,071 units if the principal
amount is converted in its entirety between May 16, 1999 and May 15, 2000. Each
unit consists of one common share and one non-transferable warrant with each
warrant being exercisable at a price of C$0.23 per share until May 15, 1999 and
C$0.27 per share from May 16, 1999 to May 15, 2000.
The policies of the VSE require shareholder approval to any possible change of
control of a company resulting from certain transactions including the issuance
of convertible securities. If the Trust converts the
Page 14
<PAGE>
principal amount outstanding under the promissory notes into shares and warrants
pursuant to the convertible loan agreements, it could result in Theodore
Tomasovich and the Trust exercising control or direction over more than 20% of
the voting rights attached to the common shares of the Company, which under the
British Columbia Securities Act is deemed, in the absence of evidence to the
contrary, to affect materially the control of the Company. The Company requested
and received approval of its security holders to the possible change of control
at the annual and extraordinary general meeting held on June 17, 1998.
Item 3. Defaults upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
During the quarter ended June 30, 1998, the following matters were submitted to
a vote of, and approved by, the security holders at the Company's annual and
extraordinary meeting, held on June 17, 1998:
(a) to determine the number of directors at four;
(b) to elect Delbert W. Steiner, Theodore Tomasovich, Robert A. Young, and Jag
Vyas as Directors for the ensuing year;
(c) to appoint Coopers & Lybrand as auditors for the ensuing year and to
authorize the directors of the Company to fix the remuneration of the
auditors;
(d) to approve:
(i) the granting of stock options and the amendment of outstanding stock
options granted to certain insiders since the last annual general
meeting; and
(ii) the granting, generally, by the board of directors of new stock
options and the amendment of existing stock options granted to
insiders; and
(e) to approve the possible change of control of the Company to the Tomasovich
Family Trust and Theodore Tomasovich, which may result in the event of the
conversion of outstanding convertible loans made by the Trust to the
Company aggregating $360,000.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS FILED ON FORM 8-K
(a) None.
(b) None.
Page 15
<PAGE>
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized, on the 8th day of April, 1998.
IDAHO CONSOLIDATED METALS CORPORATION
By: /s/ Delbert W. Steiner
-----------------------------------------
Delbert W. Steiner
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated on the 8th day of April, 1998.
Signature Title Date
--------- ----- ----
/s/ Delbert W. Steiner Director, President and April 8, 1998
- --------------------------- Chief Executive Officer
Delbert W. Steiner
/s/ Kenneth A. Scott Chief Financial Officer April 8, 1998
- ---------------------------
Kenneth A. Scott
Page 16
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
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0
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